Payment Error Rate Measurement Changes

The Payment Error Rate Measurement (PERM) is an audit program developed and implemented by the Centers for Medicare & Medicaid Services (CMS) as required by the Improper Payments Information Act (IPIA) of 2002. It is used nationwide to review beneficiary eligibility determinations and claims payments made by North Carolina Medicaid and NC Health Choice to ensure that states only pay for appropriate claims. A national report is distributed outlining the various error rates among states.

The PERM audit is required by CMS every three years and North Carolina has participated in this review process since 2007. Previous PERM cycles were based on the federal fiscal year [FFY], i.e., FFY 2016 was Oct. 1, 2015 – Sept. 30, 2016. CMS has revised the upcoming PERM cycle from the federal fiscal year to the state fiscal year [SFY]. As such, the North Carolina claims that will be reviewed in the upcoming cycle will be sampled from paid claims with dates of service between July 1, 2018 to June 30, 2019. In addition, CMS changed the PERM cycle name from Federal Year [FY] (reflecting the audit period) to Reporting Year [RY] (reflecting the date the final report would be issued). North Carolina’s next cycle will be called RY 2020 instead of FY 2019. 

PERM reviews of eligibility determinations, Medicaid Fee for Service, Medicaid Managed Care and NC Health Choice claims will be completed by CMS contractors. The PERM RY 2020 medical review audit will start in mid-March and will be conducted by Advance Med. Advance Med will be sending medical record request letters to North Carolina’s providers identified in the claims sample.

North Carolina’s goal is to decrease our error rates with each PERM cycle review. Achieving this goal requires our providers to identify and implement any needed internal quality improvements. Provider quality improvements can be realized by committing to the following best practices:

• Ensuring adherence to both state and federal regulations, guidelines, and policies related to the service type;
• Providing complete and accurate medical record documentation to substantiate the audited claim;
  • Documenting that there was medical necessity for the service provided;
  • Ensuring notations confirm that the service was provided as ordered;
• Ensuring that claims are correctly and accurately coded according to standardized coding guidelines;
• Sending required documentation to Advance Med prior to the requested deadline date on the medical records request letter.

By using these and other quality improvement practices, North Carolina will be able to reduce the number of errors and will be one of the best state performers in the RY 2020 PERM audit cycle. The error rates for North Carolina will be reported and released by CMS in the national report to be published by the end of 2020.

Providers may go to the Federal PERM website for more information.